JavaScript disabled. Please enable JavaScript to use My News, My Clippings, My Comments and user settings.

If you have trouble accessing our login form below, you can go to our login page.

If you have trouble accessing our login form below, you can go to our login page.

Chief Minister Katy Gallagher turns to Kate Carnell on 2014 budget advice


Kirsten Lawson

ACT Chief Minister Katy Gallagher.

ACT Chief Minister Katy Gallagher. Photo: Jeffrey Chan

As much as $150 million was ripped out of the bottom line of the ACT budget with the federal budget cuts on Tuesday, ACT Chief Minister Katy Gallagher said, giving the states and territories no choice but to consider an increase in the GST.

The cuts had created a “massive black hole” in the ACT budget, which would no longer be able to be signed off on Tuesday, she said. Revenue streams across the board would have to be downgraded, and spending priorities would have to be reconsidered.

Ms Gallagher said between 6500 and 8000 jobs would be ripped from the federal public service in Canberra, 3 per cent of the workforce, with flow-on impacts throughout the economy. Two thousand jobs would go from Canberra in the next 12 months, half the nationwide cuts.

“Our neighbours, our friends, people our kids go to school with, their job was taken last night,” she said, describing the budget as a “pretty nasty targeting of Canberra”.

It would force the states to look at a higher or broader GST. “We’ve had it forced upon us now. There’s no way of avoiding it because we can’t take responsibility for the black hole created by the Commonwealth if there is no revenue stream,” she said, while acknowledging the “disproportionate impacts” of increasing the GST or broadening the base.

Treasurer Andrew Barr said lower employment meant lower payroll tax. Slowing population growth meant less demand for housing, hitting rates revenue, stamp duty and land tax. Land sales were a large part of the Government income and would be hit by lower demand. More people out of work meant more people eligible for ACT government concessions and pressure on other services.

The ACT government would do what it could to buffer the impact, with no job cuts in the ACT public service, and more spending on capital works to create economic activity and jobs, but it was unlikely to be able to plug the gap, he said.

“It’s all very well for the Commonwealth to fix their bottom line. All they have done last night is pass the problem to states and territory and to each individual household,” he said.

Mr Barr is looking to significant borrowings to fund an ambitious capital works program to stimulate the Canberra economy, with everything from a new hospital to a new swimming pool, stadium and convention centre on the table as well as the Capital Metro rail project.

But former chief minister Kate Carnell, now chief executive of the Australian Chamber of Commerce and Industry, warned the government to “a be a bit careful” on borrowings, with limited options for raising money to repair a territory budget deep in the red other than higher land taxes and rates, which could discourage business and make the city uncompetitive. “Absolutely it’s good to have some infrastructure projects but, in the ACT,  you need to keep the debt low because there’s not a lot of ways of getting it back under control,” she said.

Ms Gallagher has sought a meeting with Ms Carnell, looking for ideas on how she weathered the recession sparked by John Howard’s unprecedented job and service cuts in Canberra in 1996, especially her incentive program for businesses to employ young people.

Ms Carnell said the answer was to mobilise the private sector. Commonwealth outsourcing meant big opportunities for local business, well placed to pick up the work.

“What happened last time was we had three consecutive quarters of negative growth, but within two years the ACT’s growth was among the fastest in Australia. Things turned around moderately quickly and, to some extent, that was because a lot of the outsourcing the government did was picked up by local businesses,” she said.

Ms Gallagher will also ask Prime Minister Tony Abbott for support, arguing that when other jurisdictions lose major sectors of their economy, they access federal rescue and support packages.

“If they’re going to wipe out 6500 jobs over the next four years … any other community would be given support as they transition. And why aren’t we?” she asked. “The city can’t just absorb those cuts in the public sector.”

22 comments so far

  • One should, of course, remember that this "bust" comes after the "boom" that resulted from Labor's overspending. If Labor hadn't overspent, then this "bust" wouldn't have been necessary.

    Date and time
    May 14, 2014, 12:12PM
    • Absolute total rubbish. The alleged budget emergency was nothing more than an election ploy designed to scare people.The facts are that we have the third lowest debt of any OECD country and our economy is fundamentally sound. Alan Neil from The Economist recently made Hockey look an absolute fool over the budget emergency lie. He went on to say that the Australian economy is the envy of the world. Abbott was elected on the same lie as Howard and an endless succession of Conservatives. Who could ever forget the infamous debt truck? Labor introduced stimulus spending to get us through the GFC, text book economics. It worked and we were one of the few countries in the world to avoid a deep recession. This budget has nothing to do with a budget emergency. It is 100% ideological. They are redistributing wealth to the rich and away from the poor. The Liberals fundamentally believe anyone on welfare or in the public sector are spongers and that government shouldn't have to pay for health or education.
      The cruellest impact of this extreme right wing budget is the underfunding of health and education. Even the conservative states are screaming because Abbott has stolen eighty billion dollars from their funding of health and education. The only way they can make up for this is by raising the GST. Hockey didn't have the guts to do this himself so they'll now blame the states for raising the GST when they've been left with no option. Look at the tables produced after the budget, someone on $200,000 a year is $7.70 a week worse off. A family on $120,000 a year with two kids is. $6,000 a year worse off. This spiteful budget is a complete sham, based on a lie.

      Lord Lucan
      Date and time
      May 15, 2014, 8:46AM
  • Having ACT Government Procurement support home grown ACT businesses rather than using businesses headquartered in other states or countries would be a great start. But that would actually require some effort on the part of ACT government procurement areas and so won't happen.

    So whilst our local businesses employ local people and pay their local rates and taxes, ACT Government work will continue to flow out of this town.

    And the 5%

    Buy Local
    Date and time
    May 14, 2014, 12:52PM
    • Seriously - Katy needs advice on budgeting??? Why doesn't she go to her constituents. First advice scrap the big white elephant to be built along Northbourne Avenue that will end up blowing out like all other projects and will set rate payers back $1b. Second stop the increase in size to the Legislative Assembly. Third - stop giving MLAs over the top payrises. Fourth stop increasing rates (30% increase in two years) so households have money to spend in the economy. Fifth - stop buying uneccessary items such as abstract art, skywhales and expensive furniture. Sixth - use local companies and businesses insteading of paying hundreds of thousands to outsiders for local programs and projects. Do you want me to go on? There is a minimum of $1b in savings in these suggestions alone.

      Ban the whale and elephant
      Date and time
      May 14, 2014, 1:03PM
      • Excellent points.

        Date and time
        May 14, 2014, 1:20PM
      • Spot on

        Date and time
        May 14, 2014, 5:57PM
      • Agreed!

        Adam Newstead
        Date and time
        May 15, 2014, 8:51AM
      • Agreed. The main challenge for the ACT is stemming the outrageous waste consequent on self indulgent Labor/Green projects (eg light rail) and welfare spending.

        Date and time
        May 15, 2014, 9:33AM
      • And there is the latest slap for Canberrans on top of the budget announcements. Gallagher and her Gov. say they have their hands tied and now must increase the GST/rates to raise money for toy town projects.

        If this Gov wasn’t so frivolous with Skywales, CBR promotions, overseas junkets and the like, actually ran a small council with regular salaries to focus on Canberrans needs rather than Federal issues, and actually keep a project on time and budget this wouldn’t be as big of an issue.

        If the Fed PS can take a haircut, then I don’t see how the local PS can escape freely.

        ME Mate Dave
        CBR :(
        Date and time
        May 15, 2014, 9:49AM
      • Slugged for Chief Minister.

        Date and time
        May 15, 2014, 11:47AM

    More comments

    Make a comment

    You are logged in as [Logout]

    All information entered below may be published.

    Error: Please enter your screen name.

    Error: Your Screen Name must be less than 255 characters.

    Error: Your Location must be less than 255 characters.

    Error: Please enter your comment.

    Error: Your Message must be less than 300 words.

    Post to

    You need to have read and accepted the Conditions of Use.

    Thank you

    Your comment has been submitted for approval.

    Comments are moderated and are generally published if they are on-topic and not abusive.

    HuffPost Australia

    Follow Us

    Featured advertisers

    Special offers

    Credit card, savings and loan rates by Mozo

    Executive Style